International Political Economy

Lecture 1: Introduction

2026-01-20

Introductions

About me

Who I am:

  • I am a political scientist

  • I am a post-doctoral researcher, I work with Prof. Strijbis on his project DIVIDE

  • I am at Franklin since November 2025. Before, I have lived, studied and worked in Italy, the US, and France

  • If you are curious about my background, you can check my website

What I look for in this class:

  • I want you to learn about IPE

  • I want to communicate with you as much as possible during the course

    • This is an interactive course, you will be doing much of the job anyway
    • Meet me during the week: clarify doubts, ask questions, discuss progress
    • I am also interested in continued feedback from you about the course

How to reach me:

  • Office: LAC 8
  • Office hours: Tuesdays and Fridays before class, 12.30pm-2.30pm
  • Email

About you

I want you to tell everyone, in a few words:

  • Your name
  • The place you call “home”
  • Your first memory related to international politics or economics (broadly defined)

Course overview

This class

International Political Economy (IPE): the study of interactions between economics and politics in the world economy

There are different levels of analysis

  1. Relations between states (states as “autonomous” agents): international institutions, treaties, organizations

  2. Domestic sources of international politics: what drives states’ posture in relations between states

    • e.g., accountability and representation of domestic voters and special interests
  3. International sources of domestic politics: the reverberations of international events or shocks into domestic societies and electorates

    • e.g., unequal costs and benefits for different social groups

Our approach

IPE is a subfield at the intersection of political science and economics. We will look at the world through the glasses of analytical (quantitative) political science

  • We will learn how (many if not most) contemporary political scientist analyze complex macro-level phenomena

  • That is, dissecting them into component parts within a unifying framework: rational choice

  • In short: people, politicians, governments, states… (actors) have goals and motivations and behave (act) according to them. In order to understand their behavior we need to start from what drives them

  • The goal is to arrive at understanding of facts that is generalizable across space and time

Important: mathematical or statistical training is neither necessary nor required for this class. Our focus is on understanding and applying concepts

Requirements

The final grade is based on

  • Midterm exam
  • Group paper presentation (2 sessions throughout the course)
  • Individual research design (at the end of the course)
  • Class participation

We incorporate in the course activities with external speakers @ Franklin

AI policy

By the University’s policy:

  • You are required to disclose the use of generative AI in your assignments
  • Submitting material not authored by you without proper acknowledgment will be considered plagiarism

More generally, you must reflect on the difference between using AI to help you learn and allow your your unique skills to emerge and using AI to pretend you have learned

Views of IPE

What is IPE

We can view international political economy as the intersection of the substantive area studied by economics – production and exchange of marketable means of want satisfaction – with the process by which power is exercised that is central to politics.

Keohane (1984, Ch. 2)

Liberalism

Adam Smith

David Ricardo
  • The core actors are individuals as producers and consumers

  • Free trade is a “positive-sum” game which makes all parties involved better off

  • Free markets are the most efficient way to allocate resources

  • Economics and politics are autonomous domains (and should not be mixed)

  • The government’s role should be limited to setting “fair” rules of the game and provide public goods (e.g., property rights protection, defense…) so that the market can flourish

  • Absence of conflict is natural: mutual economic interest from trade prevents wars

Marxism

Karl Marx

Vladimir Lenin
  • The core actors are the classes: capitalists (owners of means of production) and workers (owners of labor)

  • The economic-political system is shaped by capitalism and conflicting economic interests

  • Politics is subordinated to economic forces

  • Capitalism expands globally to find new markets and exploitable labor \(\implies\) imperialism

  • Capitalism creates a hierarchical international system (core-periphery). This system maintains peripheral countries underdeveloped

  • Conflict is natural

Realism

Niccolò Machiavelli

Carl von Clausewitz
  • The core actors are the states

  • States’ decisions are driven by power, its use and the desire to increase it relative to other states

  • Economics is subordinated to political forces

  • States can undermine free trade (e.g., reduce their engagement or monopolize parts of the economy) if this can strengthen their power vis-a-vis other states in other ways

  • Absence of conflict is possible if a single actor is so powerful to enforce rules \(\implies\) Hegemonic stability

Institutionalism

Ronald Coase

Robert Keohane
  • The core actors are states

  • States have common interests, but self-interest prevents from pursuing it

  • They create institutions (codified “rules of the game”) to enforce cooperation for mutual benefit

  • Economics and politics interact thanks to the incentives and rational choices of states

  • Absence of conflict (cooperation) is not natural, but can be achieved

The rational choice approach

All traditional theories provide important, sometimes crucial, insights. Our approach will be to use the prevailing methodological framework in contemporary political science (and the defining methodological framework of economics): rational choice

Institutionalist theory is an example of rational choice

There are several advantages. We can incorporate some key insights of traditional theories incorporated

  • Self-interest
  • Conflicts of interest
  • Inequality in power and wealth
  • Interactions of politics and economics
  • Institutions
  • etc.

The rational choice approach

The rational choice approach is built on a few general postulates:

  • The individual is the basic unit of analysis
  • Individuals have motivations (preferences) and beliefs about the world (due to uncertainty)
  • Their choices are constrained by objective limitations or existing rules
  • Individuals act (choose actions) according to their preferences, beliefs, and constraints

Of course we generally don’t know preferences or beliefs of others. We use assumptions about them to build models that can explain patterns of behavior. It is well understood that models are “wrong but sometimes useful”

Methodological individualism does not mean that we believe all people are selfish in a caricatural sense or have only material motivations.

For instance, we will see that it is difficult to understand the backlash against globalization without non-material concepts such as group, dignity, community, culture

Incorporating these concepts into rational choice is challenging, but many people (including the DIVIDE team) work on that all the time

Actors and relations in IPE

We often need to “aggregate” up to the level of states or governments to understand IPE phenomena

Treating states as unitary actors in a model is equivalent to assuming that who runs the state has full mandate on international issues (or that only its preferences matter)

This may be justified or not, depending on the specific theory and phenomenon we want to explain

The RC approach helps us understand and evaluate constraints of high-level actors and the consequences of their actions

Next

We will use the rational choice framework to understand the nature of problems that require international cooperation

That is, problems where “individual” incentives may clash with collective goals (trade liberalization, climate change, etc.)